Commercial Insurance Trends and Managing Risk in 2018

As we begin 2018, there are three areas to keep an eye on due to the uptick of claims and changing landscape: property, cyber and data security, and employment practices liability.

Property

In 2017, the US experienced many natural disasters. Damages from Hurricanes Harvey, Irma, and Maria and California fires are expected to result in record property losses. We can anticipate an increase in premium for all property, including vehicles. Auto premiums are already through the roof because of an increase in claims and expenses due to distracted driving and expensive technology. With almost 1 million cars lost during the hurricanes, the rates are bound to increase further.

Takeaway: 2017 losses were at a record high, but there is ample surplus in the insurance marketplace to absorb these claims. This year, we expect insurance companies to increase rates. If you have a favorable claims history, work with your broker to maintain your current pricing.

Cyber & Data Security

Cyber is a hot topic once again, with more clients buying coverage than in previous years. People all over the world felt the impact of two large cyber-attacks this year. Hackers gained access to 143 million people’s sensitive information during the Equifax breach. The WannaCry ransomware attack, initiated by North Korea, struck 200,000 computers in over 150 countries[1], requesting payment in Bitcoin in order to decrypt files.

Takeaway: Attackers are getting savvier, viewing companies, large and small, as potential targets. No organization is immune to a potential data breach. Cyber coverage remains affordable and includes coverage for increasingly common tactics, such as ransomware. Talk to your broker about getting the right coverage to protect your assets and your people.

Employment Practices Liability

With harassment allegations making daily headlines, we expect a higher number of claims in 2018. To get a better idea of this trend, the number of Equal Employment Opportunity Commission (EEOC) lawsuits doubled from 2016 to 2017. The EEOC resolved 20% of cases, collecting $18 million more than last year. Up until now, carriers have been imposing higher deductibles, but deductibles can only go so high. A large uptick in claims means that premium is likely to increase towards the end of 2018 or early 2019.

Takeaway: If you have a complaint, make sure to tell your broker right away to avoid jeopardizing reporting provisions in your policy. Insurance carriers will only approve certain lawyers and fees. It’s best to have your preferred counsel pre-approved to avoid issues when a claim arises.

Final Thoughts

For sixteen straight quarters, rates have continued to decrease, with a few areas beginning to trend upward. As the industry responds to new threats, employers can mitigate costs by planning ahead. Managing your property, cyber, and employment risks will help ensure your company’s success in 2018.

A version of this article was first published in the San Diego Business Journal.